Monday, August 1, 2011

The Rent is Too Damn High: Israeli Edition


The Israeli government is currently facing massive, nation-wide protests over the high cost of housing.  On Saturday, 150,000 seemingly middle-class people took to the streets to demand socioeconomic change and "social justice." The anger has the Prime Minister Netanyahu so spooked that he's canceled a trip to Poland to deal with the situation. 

As the New Yorker reports, the protesters "aren’t saying they can’t afford to get by, just that they can’t afford to live in the city. And the protesters contend that Israel has no Brooklyn or Scarsdale equivalent. One of them, Shlomo Krauss, criticized the outskirts of Israel for “their dubious infrastructure, failing public transportation and zero employment opportunities” in a widely circulated op-ed laying out the protesters’ gripes, with the headline, “Don’t call us spoiled.”  Some sources estimate that the price of buying an apartment has gone up 55% over the five years, while rents have increased by 27% .

For me, the big surprise is how anti-market the protesters seem.  They're calling for the government to  "immediately get involved in the housing market.  [T]hey would like to see fair housing for all, achieved by the construction of public housing projects, in addition to government oversight over the rentals market."

From an outsiders perspective, the problem looks very, very different; If anything it seems like there's way too much government involvement in the housing market already.  The Israel Land Administration controls a huge chunk of the country's property, while the nation's planning bureaucracy moves at an infamously slow pace.  Free up more land for development and you'll get more apartments.  Moreover, there's clearly a title security problem that needs addressed (and no one seems to mention).  Who wants to invest in infrastructure anywhere near the border before a lasting peace has been established?

Steve Clowney

(image found with creative commons search)

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